(WASHINGTON – July 23, 2010) The U.S. Environmental Protection Agency (EPA), the Justice Department, and the state of Indiana announced that Hoosier Energy Rural Electric Cooperative, Inc. has agreed to pay a civil penalty of $950,000 and install and upgrade pollution control technology at its two coal-fired power plants in Indiana to resolve violations of the Clean Air Act. The settlement, filed in federal court today, will reduce harmful air pollution by more than 24,500 tons per year and requires Hoosier to spend $5 million on environmental projects.

“This settlement continues our important enforcement initiative to reduce harmful air pollution from coal-fired power plants and provide the public with cleaner, healthier air to breathe,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance. “Pollution from these sources can cause severe respiratory and cardiovascular impacts, and are significant contributors to acid rain, smog, and haze. Coal-fired power plants are large sources of air emissions, and EPA is committed to making sure that they comply with the law.”

“This agreement ensures that the people of Indiana and neighboring states will breathe healthier air,” said EPA Region 5 Administrator Susan Hedman. “The terms also require Hoosier Energy to implement several innovative projects to improve the environment, directly benefitting the communities impacted by these facilities.”

EPA issued a notice of violation to Hoosier, an Indiana electric generation and transmission cooperative, alleging that in 2008 it made modifications at its Merom coal-fired power plant without first complying with New Source Review requirements, including obtaining pre-construction permits and limiting emissions based upon best available control technology.

The settlement requires Hoosier to reduce air pollution from the cooperative’s Merom and Ratts Stations, located in southwest Indiana. Emissions of sulfur dioxide (SO2) will be reduced by approximately 20,000 tons and nitrogen oxides (NOx) by more than 1,800 tons. The settlement will also reduce harmful sulfuric acid mist and particulate matter (PM) emissions. To achieve these reductions, Hoosier will upgrade existing, and install new, pollution controls at the Merom plant, install new pollution controls at the Ratts plant, and comply with annual tonnage limitations across its system. Hoosier estimates that it will spend between $250 and $300 million upgrading and installing pollution controls at its coal-fired units through the end of 2015.

Hoosier will spend $5 million on environmental mitigation projects in its service territory to address the impacts of past emissions. Hoosier must direct $200,000 for projects to mitigate the harm caused by Hoosier’s excess emissions at lands owned by the U.S. Forest Service. The remaining $4.8 million will be spent on one or more of the following projects:

• Coal Bed Methane: Hoosier will capture and combust methane from coal beds to generate at least 10 megawatts of electricity. Carbon dioxide emissions resulting from the combustion of methane will be supplied to a greenhouse for use as a fertilizer.• Wood Appliance Change-out and Retrofits: Hoosier will sponsor a wood-burning appliance change-out and retrofit project. Hoosier will provide incentives through rebates, discounts, and in some instances, replacement of old, inefficient, high polluting wood-burning technology.• Clean Diesel Retrofits: Hoosier will retrofit in-service, public diesel engines with emission control equipment designed to reduce air pollutants.• Solar Technologies: Hoosier will install solar power systems on public schools or on buildings housing non-profit groups in the company’s service territory.

The settlement marks EPA’s 20th settlement under its national enforcement initiative to reduce emissions from coal-fired power plants under the Clean Air Act’s New Source Review requirements. Sulfur dioxide and nitrogen oxides, two key pollutants emitted from power plants, have numerous adverse effects on human health and the environment. These pollutants can cause severe respiratory and cardiovascular impacts, and premature death. Sulfur dioxide and nitrogen oxides are also significant contributors to acid rain, smog, and haze. In addition, air pollution from power plants can drift significant distances downwind, thereby effecting not only local communities, but also communities in a much broader area.

The proposed settlement was lodged in the U.S. District Court for the Southern District of Indiana and is subject to a 30-day public comment period and final court approval.